1. Market Summary
Stocks Follow Through Lower
Techs were tagged once again as higher interest rates are their bane. Chairman Powell was very clear and very feisty at the presser — it is said he was told the market was rallying while he talked, so he wanted to make a point. Well, he certainly did, and techs paid the price. Of course, they were already attempting to self-destruct before Chairman Powell spoke. He just gave them the push (or was that a shove?).
NOTE: The figures and information above are from the 11/3 report.
NOTE: The videos are from the 11/2 report.
2. Targets Hit
Food, oil and materials. In any combination, those are continuing to work even as other areas of the market flop back and forth as they trend lower. Food will suffer major shortages in 2023. Yes, they have been choppy at times, but the belief is disbelief: market participants have a difficult time wrapping their heads around the idea of famine in many areas of the world. Even so, the trends are up as smart money is continually put to work. Given the action, on the week, we opted to bank part of the gain on some positions in Investment House Daily.
Archer-Daniels-Midland Co. (NYSE: ADM): 115.6% gain in the options.
W&T Offshore, Inc. (NYSE: WTI): 25.7% gain in the stock, 62% gain in the options.
We opted to let most of the oil and gas positions continue trending higher, letting the remaining portions of those positions add to what are already large gains. We did bank some more gain in HF Sinclair Corp. as it gapped on its fourth leg higher on Friday but then started to waffle a bit — lots of optimism in the market on Friday, so we logged some more gain.
Industrial metals started back upside, particularly copper, and we banked a partial position in Southern Copper Corp. as it surged to the initial target; there should be more to come from this one.
Some of the prepared food areas turned volatile after short advances. Thus, we opted to take some gains there, though we could very easily be back in them in the coming week if they can hold at near support. Food, prepared or otherwise, will remain very important in the coming year, indeed, years.
HF Sinclair Corp. (NYSE: DINO): 82% gain in the options.
PepsiCo, Inc. (NASDAQ: PEP): 23% gain in the options.
Southern Copper Corp. (NYSE: SCCO): 50.8% gain in the options.
Wingstop Inc. (NASDAQ: WING) 62% gain in the options.
Oil and gas stocks, along with metals and other “hard” materials, continued to improve — as oil prices per barrel head back toward $100 now the strategic oil reserve is about drained and supply issues continue plaguing the world — and as such, we were banking some gains on the week. We anticipate that these stocks will continue to present profitable setups as the year continues and on into 2023.
Freeport-McMoRan Inc. (NYSE: FCX): 7.57% gain.
Kosmos Energy Ltd. (NYSE: KOS): 6.83% gain.
W&T Offshore, Inc. (NYSE: WTI): 10.39% gain.
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3. Covered Call Options Play
Southwestern Energy Co. (NYSE: SWN) — Southwestern Energy Co. is currently trading at $6.47. The Nov. 18 $6.50 Calls (SWN20221118C00006500) are trading at $0.39. That provides a return of about 7% if SWN is above $6.50 by the expiration.